Settlement Agreement Without a Clear Restriction of An Assignment
In Western United Life Assurance Co. v. Hayden, 64 F.3d 833 (3rd Cir. 1995), there was a settlement agreement that did not contain clear and unambiguous language prohibiting an assignment.
However, in Hayden, the argument was raised that based upon the operation of section 130 of the Internal Revenue Code, the parties must have "impliedly" intended to restrict the assignment due to possible adverse tax treatment that might result.
As ambiguity in the contract existed, the court in Hayden examined the operation of section 130 of the Internal Revenue Code, "for the limited purpose of assessing whether the parties intended impliedly to restrict assignments" in their settlement agreement. Hayden, 64 F.3d at 841.
Although the court did conclude that it was "unpersuaded" by the tax argument, it concluded that it would not infer that the settlement agreement was "intended" to limit the assignment of Hayden's right to receive periodic payments.
Therefore, the Hayden decision did not state that a party would not lose favorable tax treatment if an assignment was allowed; it merely was not convinced that because of this possibility the parties impliedly intended to restrict assignment.